Baytex Energy Corp. (BTE), bidding for Aurora (AUT) Oil & Gas Ltd., sweetened its cash offer for the Australian company to A$1.9 billion ($1.8 billion), winning the backing of the target’s two biggest shareholders.
Baytex raised its bid by 10 cents to A$4.20 a share from an initial offer in February, the Calgary-based heavy-crude producer said yesterday in a statement. The acquisition to expand its shale portfolio with Aurora’s U.S. assets would be Baytex’s biggest. Aurora rose 5.8 percent to A$4.18 in Sydney.
The deal, which will allow Baytex to add output from the Eagle Ford shale formation in Texas, follows purchases by the producer in North Dakota’s Bakken and Three Forks shale formations. Harbour Advisors, a unit of CI Investments Inc., and Stirling Global Value Fund Inc., which together own about 17.4 percent of Aurora, said they will accept the offer in absence of a superior bid, according to the Baytex statement.
“It looks as though the offer has been made to get them on board and to get this thing through,” Andrew Williams, a Melbourne-based analyst at RBC Capital Markets, said today by phone. Even the initial price was a “knockout bid when you look at where the stock was trading,” he said.
The deal represents a 60 percent premium to Aurora’s closing price of A$2.62 on Feb. 6, the day before Baytex’s initial offer.
Aurora welcomed the increased offer, the Perth-based company said today in a statement. A meeting of Aurora shareholders is scheduled to be held in Perth on May 21, Baytex said.
The deal will boost the Canadian company’s production of higher-priced light oil.
Increasing output from shale formations such as the Eagle Ford has helped U.S. oil production rise to the highest level since 1988. The nation is set to propel past Saudi Arabia as the world’s largest supplier in 2015.
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